Luxury builder seeks triple play in Lincoln Park

A rendering of a home that will be 5,300 to 5,700 square feet with a tentative asking price of $3.2 million.

A year after opening a luxury high-rise overlooking Lincoln Park, developer John Murphy has found a builder to court more grounded homebuyers next door.

A venture led by Chicago-based LG Development Group paid $3.7 million earlier this month for four of 11 vacant single-family lots adjacent to Lincoln Park 2550, a condominium tower at 2550 N. Lakeview Ave. that Mr. Murphy built, according to a person familiar with the transaction.

LG, which acquired the parcels on Deming Place and Lakeview Avenue from a venture led by Mr. Murphy, will build three large single-family homes on the lots, which have sat vacant since construction began on the 39-story tower in 2010. In 2011, the developer sold eight lots on St. James Place nearby to Joe Mansueto, the billionaire founder of Morningstar Inc., who is building his own mega-mansion there.

LG, a design/build firm, has already sold one home it will build, a 7,000-square-foot custom-built manse, said partner Brian Goldberg, who declined to disclose the sale price or buyer. LG will build two other homes on a speculative, or “spec” basis, one measuring between 5,300 and 5,700 square feet and the other between 7,200 and 7,500 square feet, respectively asking $3.2 million and $3.9 million. Buyers there would have access to the tower's courtyard and would have the option of buying into the development's common amenities including a theater room, spa, and indoor pool.

“I think this is one of the best sites out there,” Mr. Goldberg said. “We're kind of testing the market right now with what we have.”

The sale arrives as the new-construction market heats up across Chicago. New-home sales rose nearly 40 percent in the second quarter from the same period last year, according to Schaumburg-based housing consultant Tracy Cross & Associates Inc. For luxury builders like LG, the rising market has resulted in more expensive land costs, especially in dense, desirable areas such as Lincoln Park.

“Everybody that has a piece of land that's a potential teardown has gotten wind of this market, and is asking 15 to 30 percent more than this time last year,” Mr. Goldberg said.

Another custom builder, Chicago-based BGD&C Corp., had an agreement with Mr. Murphy's Ricker-Murphy Development LLC to build its own homes on the Deming lots, but didn't want to build on spec and couldn't attract a custom homebuyer before the arrangement fell through, BGD&C President Rodger Owen said. With the cachet of Mr. Mansueto and the condo tower nearby, he believes LG has a good opportunity.

'THERE'S A HUGE NUMBER OF ADVANTAGES'

“We like the site; you have a lot of frontage on the streets, you're going to get very wide homes and an acre-and-a-half park behind you,” Mr. Owen said. “There's a huge number of advantages.”

Ricker-Murphy had closed on or contracted to sell 135, or 62 percent of the Lincoln Park 2550's 218 condos, through the end of the second quarter, according to Chicago consulting firm Appraisal Research Counselors. The developer still has to sell seven of the lots, originally slated for town homes.

“We're very happy with the arrangement,” said Mr. Murphy, president of MB Real Estate Services Inc. “(LG is) a high-quality builder and recognized throughout Chicago for the luxury product that they consistently deliver.”

Primarily a builder of high-end homes on Chicago's North Side, LG has expanded into commercial construction, including student housing and work on Stephanie Izard's Girl & the Goat restaurant in the West Loop. The firm has also built condo projects, including an adaptive reuse on Michigan Avenue and a mixed-use building on Division Street in Wicker Park.

Mr. Goldberg expects to begin construction on the 2550 homes in three to four months after presenting plans to the tower's condo association and the city of Chicago. He said LG originally proposed to buy all 11 lots, but Ricker-Murphy declined to sell them all in one transaction. Mr. Goldberg said he hopes to buy more of the lots in the near future.